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From: robinson@ubc-cs.UUCP (Jim Robinson)
Newsgroups: can.politics
Subject: Re: Free trade
Message-ID: <1243@ubc-cs.UUCP>
Date: Thu, 29-Aug-85 02:30:59 EDT
Article-I.D.: ubc-cs.1243
Posted: Thu Aug 29 02:30:59 1985
Date-Received: Fri, 30-Aug-85 06:54:51 EDT
References: <1355@utcsri.UUCP>
Reply-To: robinson@ubc-cs.UUCP (Jim Robinson)
Distribution: can
Organization: UBC Department of Computer Science, Vancouver, B.C., Canada
Lines: 91
Summary: 

In article <1355@utcsri.UUCP> peterr@utcsri.UUCP (Peter Rowley) writes:
>Back to Canada and the US.  Imagine, it's December 1990, and free trade
>exists between Canada and the US.  It's time to buy toys in a US
>department store-- and the market is open to Canadian toys.  And because
>one Cdn company worked particularly hard all summer, they have a new toy in
>the store, and it's even a bit of a better value than the US-made toys
>there.  But all the customers want to buy American.  At home in Canada,
>though, the department stores carry both the US and Canadian toys.  With
>free trade, the prices are very close, and the children have seen ads for
>the US toys on US television, so they want those toys, not the Canadian ones.
>By February, the Canadian company with the better idea is out of business.

If the Canadian company in question has just the slightest bit of
business savvy it would have inundated *both* American and Canadian 
television with commercials, and would have placed the said toy
in American stores as well as Canadian. This will result in North
American children seeing commercials for both Canadian  and 
American toys. Since children are really not too terribly interested
in nationalistic goals it would be reasonable to assume that they'll
put pressure to bear on their parents for the toy that they think
is best (which could mean the toy with the best advertising).
In other words, from the point of view of the children, the Canadian
and American toys would be competing on an even footing. But what about
the parents, you ask? Read on.....

>But, you say, most people are smarter than children when it comes to these
>things.  They will buy the best product, for the best price.  Not so.
>Many businesses buy their PC's from IBM, when clearly superior products
>can be bought from others for less.  And so often, the buying decision
>comes down to an emotional one-- and Americans are quite emotional about
>supporting American industry (apart from the fact that it's in their
>general best interests to buy American as it creates jobs in the US).
>That's 1 reason why Cdn companies run ads in US magazines listing only their US
>offices, to give the impression that they are a US company.

IBM's success can be attributed to the fact that a potential customer
knows that if he buys an IBM product not only  can he count on IBM being 
around to support that product until Armageddon, but also that he'll 
get competent, dependable and prompt service. These intangibles 
tend to be much more important to a business than whether the  PC can 
execute 0.50 MIPS as opposed to just 0.40 MIPS. 
You know the old saying - no one ever got fired for buying IBM.

I do not believe that the "buy American" attitude that is being 
attributed to our Southern neighbours does indeed exist. If this
were so the US would *NOT* have an annual trade deficit of well
over $100 billion (US). There's a reason that Congress is getting
the jitters and that reason is that Americans are simply not
*willingly* "buying American" - remember, we are talking about the
consummate capitalists here. It's worth noting that in California
one out of every two new cars bought is an import. I think Americans
are just like everybody else: if a foreign product is a better buy
than the corresponding domestic product ( where "better" could mean 
less expensive and/or higher quality but may also include some of the 
other qualities referred to above ) the foreign product will get 
purchased. In the event of a tie, latent nationalism may be exhibited
by the consumer resulting in the domestic product winning out.

>Some US companies do know a good deal when they see one, though, and Canada
>certainly has good deals on natural resources.  It would be a real boon
>to the lumber companies to have free trade, for example.  But do you want Canada
>to be a nation of hewers of wood and drawers of water?

The question boils down to: do we want to do "everything" in a mediocre
fashion or do we want to do fewer things in a superlative manner? It's hard
to be proud of a widget industry that's fat, inefficient, and lazy and 
hence wouldn't last 6 weeks if it wasn't being protected from the real 
world. Not to mention having to have to put up with inferior products
just so that Canadian companies can be spared the "trauma" of 
rationalizing their production.

It is of interest to note that the US telecommunications industry is on
record as being opposed to free trade due to their fear of unencumbered
Canadian competition. Surely what the Canadian telecommunications
industry has achieved on its own volition can also be accomplished by
other Canadian industries given the "sink or swim" incentive.

>"Free trade" just *sounds* so good, so wholesome.  But I don't think it
>stands up to scrutiny given Canadians' all-too-often perverse desire to
>NOT buy Canadian, and the American "Buy US" attitude.

In my opinion the only valid argument against free trade that I have seen 
to date is that it would probably be necessary to link the Canadian and
US dollar together in some way so that neither country could 
artificially increase exports and decrease imports by the devaluation of
their currency. However, since the Bank of Canada already pursues policies
whose purpose is to do just this it can be argued that that would
represent no real hardship.

J.B. Robinson